Gold Price Holds $3,685 as XAU/USD Consolidates Below Record $3,703

XAU/USD Pulls Back After Record $3,702 Peak

Gold (XAU/USD) eased to $3,685.39 per ounce on Wednesday, retreating from Tuesday’s all-time high of $3,702.95. December futures held at $3,720.70, marginally lower. Even with profit-taking, bullion is up 41% year-to-date, cementing its lead over equities like the S&P 500. Support is building at $3,660–$3,650, while deeper corrections could test $3,615 and $3,580 if momentum fades.

Federal Reserve Decision at Center of Gold Trading

The Federal Reserve’s 2:00 PM EDT policy announcement is the pivotal driver. Futures markets show a 96% probability of a 25 bps cut, lowering rates to 5.00%, while some speculate on a 50 bps move. A dovish Powell press conference at 2:30 PM ET would reinforce bullion strength. Political tensions—Trump’s open pressure on Powell and threats to Fed independence—are adding premium to XAU/USD, with analysts estimating an extra $100–$150/oz embedded in prices.

Deutsche Bank Lifts Forecast to $4,000/oz

Deutsche Bank raised its 2026 gold forecast to $4,000/oz, citing a surge in central bank buying and a weakening U.S. dollar. China is leading the demand surge: July imports via Hong Kong jumped 126.81% month-over-month, while the PBoC continues to expand reserves. Goldman Sachs has floated an upside case toward $5,000/oz if institutional investors reallocate even 1% of U.S. Treasuries into bullion. These forecasts underscore the scale of capital rotation into the metal as political and monetary uncertainty deepen.

Dollar Index Recovery Limits Upside

The Dollar Index (DXY) edged up to 96.37, trimming its recent weakness. A stronger dollar dampens non-U.S. demand for bullion. Technically, XAU/USD is stretched: a 2% three-day rally and 11.4% monthly gain leave RSI firmly in overbought territory. Analysts warn that a sustained break below $3,650 would confirm an evening star reversal pattern and invite a test of $3,580. Still, buyers are defending the $3,660–$3,666 band, the critical pivot zone from September’s earlier highs.

Indian Physical Market Signals Strong Holding Behavior

In India, recycled flows of jewelry and coins have dried up despite record valuations. Retail holders are reluctant to sell, betting on further appreciation. This scarcity in secondary supply adds to the global demand squeeze and aligns with the heavy official accumulation seen across emerging markets.

Other Precious Metals Under Pressure

Unlike gold, other metals slipped. Spot silver fell 1.3% to $42.00, platinum dropped to $1,372.26, and palladium retreated to $1,158.88. The divergence reflects gold’s unique role as a monetary hedge in uncertain times, while industrial-linked metals remain vulnerable to weaker global trade and tariff disruptions.

XAU/USD Outlook: Bullish but Stretched

Gold consolidates near $3,685, sitting just under historic highs. Fundamentals—Fed easing, political risk, and record central bank buying—support higher levels, with targets at $3,740, $3,800, and $4,000 by 2026. Short-term risks include overbought technicals and stronger equity performance, but structural drivers favor sustained upside.

Given the balance of forces, XAU/USD is a Buy on dips, with accumulation advised between $3,650–$3,615 and upside targets at $3,800 in the near term and $4,000 in the medium term.

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